Introduction
Intel Corporation is the world’s largest semiconductor chipmaker. Founded in 1968 by Gordon Moore, Robert Noyce, Arthur Rock, and Max Palevsky, the company makes integrated circuits, flash memory, embedded processors, motherboard chipsets, and other communications- and computing-related devices. Due to increased competition from Japanese semiconductor manufacturers in the early 80’s, Intel decided to focus on microprocessors.
Intel experienced tremendous growth by the late 80’s, when Intel became the primary supplier of microprocessors for IBM and then the PC industry. In addition to its excellent positioning, Intel launched its “Intel Inside” marketing campaign that increased brand loyalty. Consequently, the campaign,
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The new campaign also transitioned Intel’s marketing efforts from traditional to digital marketing. Today, at least 80% of Macs and PCs are shipped with Intel processors globally garnering the lead market share in the microprocessor industry.
How did Intel leverage its competitive advantage to regain its market share? This case study will analyze Intel Corporation’s competitive advantage, which includes economies of scale, customer captivity, cost, and government protection. These competitive advantages will be complemented with Intel’s competitive analysis, in order to understand and realize Intel’s and the microprocessor industry’s whole competitive landscape.
Intel’s competitive analysis
Value Chain
Intel Corporation has an interesting value chain. It has numerous suppliers and even bigger number of customers. The company’s value chain is shown in the diagram below. Intel Corporation leverages its technology to stay high up in the value chain. Intel has leveraged its positioning to become the most widely-used microprocessor in the PC market. The company has a reputation of bringing the fastest and most innovative product in the market and has become the go-to processor for most computer systems available. Manufacturers like Dell, Gateway, and Apple, use Intel’s processors for their products. These systems are then distributed directly to companies and consumers, or through a retailer like Best Buy or Fry’s.
SWOT
Intel is dominating the semiconductors industry,
On the 1st of June, 2015, Intel announced that they acquired Altera, another chip maker in the high technology industry who is particularly professional in producing programmable chips, by $16.7 billion as well as about $54 per share for Altera shareholders, which was the largest acquisition that Intel ever made (Nusca, 2015). The price is quite close to which was proposed by Intel, but in fact, just two months before Intel approved the acquisition, Altera rejected the price that Intel proposed. In the last few years, Intel suffered from the declining sales of personal computers, of which has been the main profitability source, and has been dominated by Intel for a long time, as consumers switch their preference from laptops and personal computers to tablets and other mobile devices (Huddleston, 2015). As a result, away from PCs, Intel has to work harder to get
For years, AMD held the place of a distant follower of the large microprocessor market leader, Intel. Up to there, the competitor Intel led the market (with a “push” strategy) by creating consumer needs thanks to technological innovations. Those were linked with strong marketing campaign in order to facilitate a quicker adoption process of their new product line. However, in 2003, AMD change its traditional strategy to use a widely different one by switching into a blue ocean strategy. Indeed, AMD has changed course to become a “starter” firm. AMD has decided to launch at first its own brand server microprocessor range, called “Opteron” before one of Intel. At this moment, the firm made the decision to initiate the moves of server segment and therefore take heavier risks in term of investments, sales, pushing partners
Intel operates in an industry, which is comprised of products involving high research and development costs, continuous product improvement and new innovations. The companies in the industry are having high economies of scale and are knowledge based. It helps both the service and manufacturing sectors in the growth process. Intel is positioned as a leading company with its ability to adapt to technological changes and its strong relations with other businesses who are major buyers of integrated circuits. The industry in which it operates is very competitive and comes with high risks as
From pioneering in memory DRAM semicon to exiting the low-margin DRAM market – Intel was primarily a Memory semicon manufacturer before it entered microprocessors in 1980s. Its added value in the memory industry in 1970s was very high because of its advances in MOS process to produce DRAM. However, with increase in competition and the advancement of Japanese conglomerates in the memory industry Intel was forced to play a chasing game to improve performance and reduce costs. In the mid-1980s, Intel’s market share in the core memory business was <1%, however it was continuing to invest in this domain. They finally exited the DRAM market, which was more of a cash burner with low-margins.
First, Apple introduced a new OS in 2001. Second, Apple shifted to Intel chips and by the following year all Macintosh line ran on Intel making laptops run faster for less power. The third strategy was the development of proprietary set of applications. The fourth strategy in becoming the “digital hub” was to come up with a new distribution strategy: the Apple retail store, where customers can have a direct use and experience of Apple’s product and software.
Apple has a vertically integrated business model, meaning that they are involved in nearly every step of the production process for Apple products. The hardware they produce can be accompanied by a variety of Apple brand accessory components consumers may wish to use with their Apple device. The most popular Apple devices include iPod, iPhone, iPad, MacBook and AppleTV. Apple products run on their own unique operating system, which sets them apart in the industry from other personal
The team shall lead a class discussion for Intel Corporation 2010, with an analysis of Intel’s profitability. In addition to the presentation, a written report will be submitted onto Blackboard by May 2, 2011. The report shall contain the answers to the questions in the project handout.
With Intel have very few substitutes in the microprocessor industry, it is it is most certain that current customers will not want to switch and use another company’s products. High switching cost presents low bargaining power to the customers mainly because it would be very expensive to switch to a competitor, and since Intel is the leader in the market, switching
PC computing was the center of computing during the 1990s, but the internet took over the next decade. Cellphones are sold more than PCs, and that is because they can access the Net. Network and communication became more important to people, whether it is in the home, small business or enterprise. Intel response to the changes in the environment by investing a lot of money in four areas, client platforms, server platforms, cellular and wireless, and communication and networking. Despite the fact that Intel took several steps toward making a position for it in the mobile and internet market, the threat of being behind
This is especially important for an IT company such as Intel as it can be the key for the companies to survive or the reason which made the failure of some IT companies. There are more and more consumers in the wireless industry, nobody can argue that the PDA and cell phones have become so popular; they are the new digital trends of this era. Intel cannot ignore this profitable industry. So it has researched and announced the new chip “Atom” for mobile devices which is believed to “unleash new innovation across the industry." said Intel executive VP and chief sales and marketing officer Sean Maloney (Geoff, 2008).
This case traces the strategic decisions of Intel Corporation which defined its evolution from being a start-up developer of semiconductor memory chips in 1968 to being the industry leader of microprocessors in 1997 when it ranked amongst the top five American companies and had stock market valuation of USD 113 billion.
This report discusses the case study ‘Intel Research: Exploring the Future [1], published in 2005 by the Harvard Business School. The discussion is divided into three different sections: overview, analysis and conclusion.
One key element of Apple’s strategy in computers, personal media players, tablet computers, and smart phones is product innovation, diversification and development. Over the years Apple has been very successful in integrating software and hardware in new developing products. Despite the struggling economy in recent years, Apple has been able to grow their market share and stay ahead of the game.
The multi billion-dollar corporation, Apple Inc., designs and manufactures some of today’s highest technological gizmos and gadgets. Among their best known products are the Apple and Macintosh computers, iPods, iTunes, iPhones and iPads. Apple is one of the most powerful and influential high tech companies in the world. The success of Apple Inc. stems from the innovation and visions of co-founder and entrepreneur, Steve Jobs, the excellence of the stylish, user-friendly products, and the ability to create innovative products that consumer’s desire.
This report will explain how Intel has developed a mechanism to align its branding and marketing strategy with those of clients in the home and office market computing sector. Intel’s use of an integrated co-branding